Road Capacity, Domestic Trade and Regional Outcomes / A. Kerem Coşar, Banu Demir, Devaki Ghose, Nathaniel Young.

Format:

Book

Author/Creator:

Coşar, A. Kerem.

Contributor:

National Bureau of Economic Research.

Demir, Banu.

Ghose, Devaki.

Young, Nathaniel.

Series:

Working Paper Series (National Bureau of Economic Research) no. w29228.

NBER working paper series no. w29228

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

What is the impact on intra-national trade and regional economic outcomes when the quality and lane-capacity of an existing paved road network is expanded significantly? We investigate this question for the case of Turkey, which undertook a large-scale public investment in roads during the 2000s. Using spatially disaggregated data on road upgrades and domestic transactions, we estimate a large positive impact of reduced travel times on trade as well as local manufacturing employment and wages. A quantitative exercise using a workhorse model of spatial equilibrium implies heterogeneous effects across locations, with aggregate real income gains reaching 2-3 percent in the long-run. Reductions in travel times increased local employment-to-population ratio but had no effect on local population. We extend the model by endogenizing the labor supply decision to capture this finding. The model-implied elasticity of employment rates to travel time reductions captures about one-third of the empirical elasticity.

Notes:

Print version record

September 2021.